We’ve all grown up in a world in which growth reigned. Your house goes up in value, you get pay rises, you get wealthy from rising stock markets.

That inflationary world is dead. Why? In one word: technology.

In 1988, Jeff Booth’s employer gave him a cellphone that cost $2,000. It gave him 30 minutes of talk time, then it had to be recharged. His first cell phone bill was $1,200. The iPhone may seem expensive, but it’s incredibly cheap and infinitely better than the first cell phones.

We once bought expensive sets of encyclopedias, now we have free Wikipedia and free Google search. Technology is deflationary. Meaning, it constantly gives us more for less.

Deflation is simply when you get more for your money, because the price of things goes down. Inflation is when you get less for your money, because the price of things goes up.

If we’re constantly getting more for less, a family with an income of $85,000 could conceivably get by on $75,000 and still have the same quality of life. In a world of abundance, we shouldn’t assume wages will keep increasing, or that they even need to.

But if technology is making everything cheaper, thanks to increasing efficiency and decreasing costs, why does life seem to be getting more expensive? For one reason: the rise in prices is artificial, driven by huge increases in credit and debt. This “growth” is not real growth.

Total world debt has gone from $62 trillion in 2000, to $247 trillion today. But the world economy has only grown from $33.5 trillion, to $80 trillion. In other words, it’s taken around $185 trillion of debt to achieve only $46 trillion of world growth.

We assume that assets like homes and stocks will always go up, but in the last 20 years they have only because huge amounts of debt capital has been injected into the world economy. When that stops, assets prices will sink.

“If it takes ever-increasing credit growth to achieve economic growth, how are our economies any different from a Ponzi scheme? A Ponzi scheme creates an illusion of profits because it pays early investors with investments from later investors.” Jeff Booth